Perhaps the biggest force working against not just Solyndra but clean energy in general is this: Because natural gas has gotten so cheap, there is no longer a financial incentive to go with renewables. Technical advances in natural gas extraction from shale—including the controversial practice of hydraulic fracturing, or fracking—have opened up reserves so massive that the US has surpassed Russia as the world’s largest natural gas supplier.

Clean Tech isn’t going to replace fossil fuels just because it’s a good idea and better for the environment. As long as traditional energy is cheaper to produce and use, clean & green will remain on the edges. Large investments in clean tech haven’t produced the breakthroughs needed, and fossil fuel prices haven’t reached the tipping point where consumers will demand alternatives in profitable numbers.

Do energy prices impact your business? What do you think it will take to make clean & green viable?

6 thoughts on “Why the Clean Tech Boom Went Bust”

Energy prices haven’t impacted my business but the clean-and-green trend has significantly raised the cost of keeping my horse. Because of the ethanol push, much of the corn that was being raised as an ingredient for horse feed has been redirected to ethanol production. Our feed bill has soared. A lot of people here in Texas are having to give up their horses because they can’t afford to feed them.

Thanks for the comment! Corn-based ethanol presents a lot of problems, one of which you highlighted. I know there’s a trend toward other kinds of biofuels using algae, cellulose and other non-food sources. Still, none are ready for prime time yet!

The fossil fuels industry, and the energy industry based on fossil fuels (which, to date, has been the entire energy industry), has repeatedly experienced severe boom-bust cycles. Think of the big government Synfuels project that was axed as soon as the price of petroleum dived after another bust in the industry.

These boom-bust cycles in the energy industry have closely followed the business cycles of industrial-technological civilization: economies grow, putting pressure on energy supplies, increasing costs in energy trigger a recession, and the recession eventually triggers a bust in the fossil fuels-driven energy industry.

It is interesting to speculate how deeply this cycle is entrenched in the economy, and one way to find out would be a large scale conversion to non-fossil fuels — but, as you point out, this isn’t going to come about until alternative sources are easier and cheaper than traditional sources.

However, it should be pointed out that the increasing use of natural gas as a fossil fuel (and therefore increasing exploration and exploitation of natural gas reserves) has been driven by continuing public distrust of the nuclear industry and the attempt to find alternatives to oil and coal. Natural gas may still be a fossil fuel, but it is far cleaner than oil and coal.

Hi Nick!
What do you think the increasing demand for oil from China and other rapidly developing countries will have? Will that speed up the boom/bust cycle? I’ve also read that we’re either close to or already past the “peak oil” point or at least all the “easy oil” is gone. I don’t see much drive for alternatives in the US until prices hit $5+ a gallon. And after the disaster in Japan, there’s not going to be much popular support for nuclear any time soon.